Official Aid and Philanthropy: a Clash of Civilisations?

Partnership is all the rage nowadays in the world of development. Yet behind the consensual language of collaboration lies an uneasy relationship between state and private organisations, based on their very different attitudes and cultures. The worlds of business, philanthropic foundations and official donors have been evolving in parallel, and there is often misunderstanding of each other’s methods as well as a tendency to keep one another at arm’s length.

Less than a decade ago, philanthropy was seen as a sideshow in global development. When Michael left the Department for International Development (DFID) in early 2007 to write Philanthrocapitalism, most of his colleagues wondered why he was interested in such a marginal issue as giving or private sector solutions to society’s big problems. The Paris Declaration on Aid Effectiveness of 2005, for example, made no reference to philanthropy. Why should it? Pledges of extra aid money made at the G8 summit in Gleneagles that year meant signatories had little need to partner with the private sector.

Those hopes of plentiful official aid flows were dented by the financial crisis of 2008, however, prompting a search for new ways to finance development and complement official development assistance (ODA). When the Organisation for Economic Co-operation and Development development assistance committee (OECD DAC) met again in Busan, South Korea, in 2011, philanthropy had made its way into the communiqué. The G20 went a step further that year by asking Bill Gates, the most famous of all philanthrocapitalists, to write a report on how to finance the millennium development goals (MDGs).

It is only natural that philanthropists and business leaders have welcomed this belated recognition of their contribution to global development with lukewarm enthusiasm. The eagerness of official donors for the “new global partnership” has evidently been driven much less by an interest in the innovative ways that business and philanthropic organisations operate, and much more by the official development community’s need to find new forms of financing. The message to philanthrocapiitalists is unappealing: give your money through existing aid channels, desist from running your own programmes, and help drum up support for more taxpayers’ money for official donors to spend.

The resulting sense that official donors have nothing to learn from philanthrocapitalists is a fatal cultural flaw. Yet the fault does not lie with official donors alone. Too many businesses and private donors are unaware the MDGs even exist. Too few understand how the official aid system works, or that an aid ecosystem is in place that they should, at least, be aware of when they get involved on the ground.

Philanthropists have also, regrettably, lagged behind official donors in embracing the culture of transparency, data sharing and accountability to the intended beneficiaries of their largesse and to the governments of the countries where they operate. The Rockefeller and Bill and Melinda Gates foundations, which have built strong partnerships with official donors and engaged with governments in developing countries, are notable exceptions. The Gates foundation has been reporting its aid spending to the OECD DAC since 2011.

The Gates foundation’s considerable resources – both its money and its founder’s public profile – mean it can negotiate on equal terms with governments. Yet Gates’s acknowledgement that even his philanthropic behemoth is “a tiny, tiny organisation”, compared with the challenges it faces, reflects that foundations cannot do it alone.

So what should the new global partnership look like? First, there must be joint decision making and shared governance. Official donors cannot expect private philanthropic organisations to stump up cash without a seat at the table.

The Global Fund to Fight Aids, Tuberculosis and Malaria was an important innovation here: giving private donors and businesses seats on the board made it much more attractive to philanthrocapitalists than, say, giving a grant to the World Health Organisation over which they would have little influence. More of these unconventional funding mechanisms and issues-based partnerships will be needed.

Second, partnership works best around specific issues. Like it or not, success breeds success: if philanthropic organisations can see their money having concrete results and tangible impact, further donations are likelier.

As a successful partnership between official and private donors, the Malaria No More campaign is instructive. Some worry that focusing on success in this way distorts the global development agenda towards quick wins or more media-friendly issues. Maybe so. Yet suggesting that ODA is immune from faddishness, or the influence of what taxpayers might find “sexy”, is a bit of a stretch. Frankly, finding jobs for unemployed youth in Africa, or getting access to quality education, is likelier to attract funding than statistical capacity building. Moreover, in straitened times, heeding public opinion in donor countries and demonstrating success will be increasingly important.

Third, it is necessary to understand the division of labour. We are optimistic about the potential of the new global partnership because business and philanthropy can do things official donors cannot. A philanthropic dollar and an ODA dollar are very different. Rather than trying to fill the funding gap in existing official donor programmes, philanthropy should play the role of innovative risk capital in development, testing new ideas that can be scaled by official donors in collaboration with partner governments and local organisations. This is already happening to some degree, as with the partnership between USAid and the Skoll foundation on the Development Innovation Ventures programme.

“Nation states will remain the most powerful actors in world affairs”, wrote Samuel Huntington in the introduction to his landmark 1993 essay The Clash of Civilisations?. Though still true, the world has changed much in the past 20 years. The new global partnership must reflect the reality that governments are going to have to work more closely with philanthropic organisations and private actors to solve big global problems. We cannot walk the talk while running on parallel tracks, no matter how fast we go.

[A version of this article originally appeared on The Guardian’s Poverty Matters blog.]

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Matthew Bishop is the US Business Editor and New York Bureau Chief of The Economist. Mr. Bishop was previously the magazine's London-based Business Editor.

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Michael Green is an economist and writer, based in London. He is an adviser to the Big Society Network and a fellow of the Royal Society of Arts. Read more.

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